08/01/21

HONG KONG: Customs Flags Money Laundering Risk from Money Changers.

As published on regulationasia.com, Friday 8 January, 2021.

Amid the pandemic, some criminal actors have turned to licensed money changers, who were more easily lured into criminal activities as their businesses suffer.

Hong Kong’s Customs and Excise Department seized HKD 4.6 billion in dirty money in 2020, the highest amount since 2016, according to the South China Morning Post.

Overall, the Department arrested 38 people in connection with nine cases in 2020, twice as many as the 19 suspects arrested over HKD 3.6 billion in allegedly launder funds in 2019.

In 2020, Hong Kong courts also ordered the freezing of some HKD 35 million in suspected criminal proceeds, nearly six times the HKD 5.6 million frozen in 2019.

Superintendent Grace Tang Wai-ngan, head of the Department’s financial investigation group, told the SCMP that Covid-19 pandemic has altered money laundering activities.

In addition to traditional tactics such as conspiring with offshore companies to funnel ill-gotten gains out of Hong Kong shell companies, some money launderers turned to licensed money changers, she said.

Money changers has been more easily lured into criminal activities as their businesses were severely hurt by Covid-19, enabling launderers to avoid the scrutiny of banks for their transactions.

In September, customs officers arrested the owner of a licensed money exchange business and five members of a family accused of laundering more than HKD 3.4 billion through over 100 personal bank accounts. The family’s son is said to have handled HKD 170 million in transactions as a manager at the money changer.

Officials last year also detected two cases of cash being smuggled into the city by air and land. In one case, two separate caches of EUR 500,000 were found hidden inside electric water heaters arriving from Germany. “Syndicates in some places still urgently needed cash, but smuggling by people has been very difficult during the pandemic,” Tang said.

In December, Hong Kong authorities also reportedly arrested four individuals who allegedly used a local remittance firm and more than 20 shell companies to launder HKD 880 million over 11 months from May 2018 to April 2019.

According to investigators, the money was transferred to the bank accounts of overseas companies in Europe and America, with the remittance company pocketing up to HKD 50 million for its role in the scheme.

In Hong Kong, money laundering carries a maximum penalty of 14 years in prison and a HKD 5 million fine.